Cost of Destabilisation of Agriculture 2007

From The Financial Gazette

15 November 2007

Farm destabilisation creates US$5 billion trade deficit

The violent takeover of commercial farms has ruined Zimbabwe’s agricultural sector
Photo courtesy © Panos Pictures

Zimbabwe has accrued a US$5 billion trade deficit over the past five years due to the destabilisation of agriculture, a parliamentary committee has reported.

The Lands and Agriculture committee, in its first report on preparations for the 2007/08 farming season, cited the deficit after gathering evidence from the ministries of Agriculture and Agricultural Mechanisation as well as farmers’ unions, seed houses, and Agribank.

"Your committee was informed that the country was under-producing by US$650 million of agricultural exports, and importing goods worth US$350 million to cover mainly food deficits annually. As a result of low agricultural productivity, your committee was told that the country has incurred a deficit of US$5 billion for the last five years," the report says.

The committee, headed by Chief George Chimombe of Manicaland, gives a bleak forecast for the new season, officially dubbed "the mother of all agricultural seasons".

Input supply would remain unreliable, the committee said, dashing hopes of a recovery. Representatives of fertiliser manufacturers told the committee that they were not able to meet national requirements due to a combination of factors, the main one being a pricing system that makes their businesses unprofitable, a worsening scarcity of foreign currency, power outages and erratic coal supplies.

"Your committee noted with concern that even if all the requirements for the fertiliser industry were met today, it would not be possible to produce adequate fertiliser between now and December."

Fertiliser prices were last reviewed in April, forcing companies to absorb increased costs without passing them on to consumers.  As of September 10, seed companies said of the 50 000 tonnes of maize seed required, there was a deficit of 21 000 tonnes because of unviable pricing.

The committee was told that growers were holding onto their seed in anticipation of a price review, with Agriculture Minister Rugare Gumbo having told the committee that he had recommended a review of the price to the National Incomes and Pricing Commission.

"At the time your committee conducted its inquiry, the permanent secretary for the Ministry of Agriculture confirmed an acute shortage of fuel.

He said only six million litres against a national requirement of 119 million litres had been sourced, and that this was being distributed at 1000 litres per farmer, which stakeholders felt was a drop in the ocean if set targets for the summer crop were to be met."